Twitter stock continues to slide

The Associated Press

Posted:
01/08/2014 02:34:47 PM PST

Updated:
01/08/2014 02:58:17 PM PST

NEW YORK—Twitter's stock price continued a recent decline on Wednesday, closing down 3.5 percent to $59.29 after an analyst lowered the short messaging service's rating on concerns that its stock price is too high.

Shares of Twitter Inc. surged 53 percent in December as investors disregarded the company's lukewarm early-November initial public offering. But the company's soaring stock price has given analysts pause, even as they remain upbeat about Twitter's business model.

Youssef Squali of Cantor Fitzgerald sees big things ahead for Twitter, but says the December surge was unwarranted. At least two other analysts have expressed similar concerns in recent weeks. Squali lowered his rating on Twitter's stock to "Sell" from "Hold" on Wednesday, calling the stock's price "excessive." He thinks a fair value for the stock is $32.

Twitter, Squali says, "remains one of the fastest-growing companies" and one of the few key players among social Internet companies, but considering its current value he prefers Facebook and Google as investments.

San Francisco-based Twitter went public nine weeks ago with an IPO price of $26. The stock's current price is still more than double its IPO price but down 14 percent for the week.